Leaving a job to start a business is a big step. Your health plan is one thing you don't want to lose along the way.
This guide is about coverage for you, the owner, and your family. It covers the window you get when job coverage ends, your main choices, how to estimate your first-year income, and the tax deduction you may get later.
Losing job coverage opens a 60-day window
Under current law, losing health coverage from a job is a reason for a Special Enrollment Period. That's a time when you can sign up for a Marketplace plan outside Open Enrollment.
CMS, the federal agency that runs the Marketplace, says you can report a loss of coverage up to 60 days before or 60 days after it ends. The federal rule is 45 CFR 155.420.
This gives you a way to plan ahead. If you know your last day, you can pick a plan before then. Under the same rule, a plan picked before the loss can start the first day of the month after your job plan ends.
One catch: the window is for losing coverage. Under the rule, dropping a plan by choice, or losing it for not paying, doesn't count.
Your main choices
Most new owners pick from a few options:
- A Marketplace plan. Under current law, you can't be turned down or charged more for a health problem. A tax credit may lower the price, based on your income.
- A spouse's job plan. Under federal rules (45 CFR 146.117), a job plan must give you at least 30 days after you lose other coverage to ask to join. Ask the plan for its exact deadline.
- COBRA. See below.
- A private plan. See the private plan section below.
COBRA can keep your old job plan for a time, usually at full cost, so compare it first in our guide to COBRA vs the Marketplace.
Estimating your first-year income
A Marketplace tax credit is based on your household income for the year you are covered. For a new business, that's hard to estimate. Your old paycheck may not match what the business will earn.
Use your closest estimate of net income. For a business, that's what you bring in minus your costs. Add any other income, like a spouse's pay or the part of the year you were still at your job.
Under current law, for 2027 the tax credit is generally limited to incomes from 100% to 400% of the poverty line. If your estimate is near 400%, a small change can matter a lot. See our guide to the 2027 subsidy cliff.
Update your estimate during the year if your income changes. You settle up on your tax return. Our step-by-step guide shows how to estimate your income for Marketplace coverage.
When a private PPO is worth a look
Some owners also look at private PPO plans sold outside the Marketplace. This can make sense if your income will be over 400% of the poverty line, so you get no tax credit, or if you work in more than one state. Some private plans ask health questions, and approval is not guaranteed. Some may not cover care for health problems you had before you enrolled. The insurer reviews your health answers first. This is called underwriting.
Under current law, private plans that ask health questions are not ACA plans, and the tax credit can't be used for them. Read each plan's papers before you choose. See private PPO vs the Marketplace and our page for people who work for themselves.
The tax deduction once you have a profit
Under current law, many self-employed people can deduct what they pay for health insurance. The IRS uses Form 7206 for this.
Two limits matter for new owners. The IRS instructions say you need a net profit from the business. And you can't take the deduction for any month you could join a subsidized job plan, including a spouse's, even if you didn't join.
The rules have more parts, so talk with a tax professional. Our guide to the self-employed health insurance deduction explains them.
Timing with Open Enrollment
As of October 21, 2026, under current law, Open Enrollment for 2027 coverage runs November 1, 2026, to January 15, 2027. A court case about these dates, City of Columbus v. Kennedy, is still on appeal, with argument set for October 30, 2026, so check HealthCare.gov. See every date in our Florida open enrollment guide.
If you leave your job outside Open Enrollment, the 60-day window still applies. If you do contract work on the side first, see do 1099 contractors get health insurance.